The time has come for banks to say goodbye: New evidence on bank roles and duration effects in relationship terminations

Kiyotaka Nakashima and Koji Takahashi

Journal of Banking & Finance, 2020, vol. 115, issue C

Abstract: Examining a loan-level matched sample of Japanese banks and firms, we study the factors determining the termination of bank–firm relationships. We find that such terminations are mainly driven by bank-side factors and that these bank-driven terminations increase when banks’ capital conditions worsen. Furthermore, a longer relationship duration decreased the probability of termination substantially when the Japanese banking system was stable, whereas the duration effects weakened when the system became fragile.

Keywords: Matched lender–borrower data; Bank–firm relationship; Capital crunch; Evergreening; Flight to quality; Duration effect; Long-term contract (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: The Time Has Come for Banks to Say Goodbye: New Evidence on Banks' Roles and Duration Effects in Relationship Terminations (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:115:y:2020:i:c:s0378426620300807

DOI: 10.1016/j.jbankfin.2020.105813

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